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If you've been following the MBS Commentary, you know what a big deal this afternoon could be. Markets have been preparing for it for weeks and MBS Live members have been on top of those movements every step of the way.

This afternoon, when markets are convulsing mere milliseconds after the Fed Announcement, MBS Live members will know what's going on before anyone else. The accuracy and speed of our real-time price stream and alerts is unmatched.

The trading day began mostly uneventfully, with bond markets working their way into positive territory by the domestic open. Economic data didn't stand in the way of the gains. The last major test for that came at 9:15am when Industrial Production came out slightly stronger than expected. For a few moments, it looked like we might be seeing a turning point toward weaker levels, but MBS/Treasuries bounced before making any new lows (or 'highs' in the case of yields).

Just over an hour later, any assessment of the morning movement would look silly and insignificant. A batch of headlines out of Ukraine sent markets reeling. Here's a recap (all headlines from Reuters unlise otherwise specified):

These were disconcerting enough and evenly spaced enough as to keep a steady rally intact for bond markets. At their best levels, 10yr yields were as low as 2.303, and have only backed up to 2.315 since then. MBS are 3/8ths of a point higher on the day with Fannie 3.5s up to 103-00. Most lenders have repriced positively.

While these things sometimes do bounce back, it's not an unsafe assumption that such a bounce would be limited in this case, by the potential for the situation to deteriorate over the weekend.

MBS Pricing Snapshot

Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.

Matthew Graham : "the most important part is the "holding the bag" cliche."

Sung Kim : "great day ahead MG - the chart looks like a video game"

Hugh W. Page : "The implications and dynamics of a Fed shift to no QE and rising rates in the current world economic and geo-political environment we have is enough to make my head explode. Something tells me volatiity is going to pick up quite substantially as we head into 2015."

Matthew Graham : "NP. To conclude, I'd say it's safe to think about it in terms of 'diminishing returns' for each degree of separation between an event and rate sheets. In the current case, geopolitics in Ukraine hits European markets hardest, then Treasuries, then MBS, then rate sheets. The day of the week is like the backdrop where Fridays tend to render the paint in more conservative colors. "

About the Author

A former originator, Matthew began writing for Mortgage News Daily in 2007, covering a wide range of topics. Seeing a need in the marketplace, his focus increasingly shifted toward relating MBS and broader financial markets for loan originators.
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